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Dollar drifts lower

NEW YORK: The dollar edged lower at U.S. midday as profit-taking ended an early rally against the mark, dealers said.

The slumping mark continued to define most market trends as virtually every news item pointed toward a weaker German unit. But hints of rising Japanese interest rates, despite broad official denial, boosted the yen against the dollar.

The dollar fell to 1.5150/60 marks at midday from 1.5175/85 at the open and to 106.62/72 yen from 106.68/78.

Overnight the dollar had posted a new 14-month high at 1.5199 marks amid signs Italy may rejoin the European exchange rate mechanism (ERM), bolstering the ERM campaign overall.

Mark/yen sank to a four-month low at 70.19, but later rebounded, pushing dollar/mark lower.

Mark/yen appeared ready to settle in near 70.40, with a break there seen yielding a return to resistance at 70.60.

The dollar was virtually flat at Canadian $1.3620/25 from C$1.3619/24. The Australian dollar stood at $0.7863/68.-Reuter